No Man’s Land: Why Developers Are Walking Away From Hong Kong’s Land-Sharing Pilot Scheme
In the wake of mass protests and social unrest in 2019 and 2020, Beijing was swift in urging Chief Executive Carrie Lam to address Hong Kong’s entrenched housing crisis. Historically attributed to its status as a property state, the city ranks amongst the most densely populated and economically unequal in Asia, with the average family needing to bank its entire income for 16.7 years to afford a home. Against these dire straits, the government launched the Land Sharing Pilot Scheme (LSPS) in 2020, which was billed to unlock idle farmland and crowd in private capital, whilst allowing developers to increase land density – provided that at least 70% of it was reserved for public housing. Yet, as of October 2025, not only has the scheme been defunct for over a year, but the first application, made by Brasilia (a subsidiary of Lee On Investment), was withdrawn earlier this month.
Land in Hong Kong has long been financially engineered, underpinning both its asset markets and fiscal balance sheet. The government, as the sole supplier of public and private housing, derives more than 20% of its total revenue from land sales premiums – a dependence far higher than fiscally disciplined economies such as the United Kingdom or even Singapore, another so-called micro ‘property state.’ The LSPS, contingent on developer goodwill and red tape transparency, ignored the government’s own symbiotic alliance with oligopolist developers. With profits secure, why should those who benefit the most from scarcity volunteer to make land cheaper? The civil society group Liber Research Community denounced this “pay-to-play” scheme, arguing that the LSPS policymaking, captured by land tycoons, suffers from innate conflict of interest issues.
But pessimism surrounding this scheme has not always been endemic. At its launch in 2020, early forecasts highlighted the LSPS’ potential for quick development process, reducing the time needed for rezoning (re-designating the purpose of land) from five to three years. In Carrie Lam’s announcement, LSPS vitally aimed to complement, not replace, government-led housing initiatives, seeking to form a public-private partnership without any semblance of cartel collusion. The first wave of applications in 2021 was buoyed by this prospect, as major developers such as Hung Kai Properties and New World Development rushed to build more than 21,600 flats (15,100 of them public) under these streamlined contracts. By adhering to this scheme, they could act more competitively whilst simultaneously appearing socially responsible, a win-win scenario that offered rare harmony between Beijing and the market.
What then explains its immense fall from grace? By the time the application period closed in 2024, the scheme had received only six applications, with Legislator Wendy Hong lambasting it as “never attractive” in the first place. For one, geographical limits were etched into the scheme’s very design. At its inception, LSPS applications were limited to the northern New Territories, where British colonial zoning had sectioned off vast parcels of Country Parks, Sites of Special Interests, and Green Belts, almost 70% of Hong Kong’s land potential. Most crucially, land already earmarked for other government schemes was also ineligible, effectively reproducing the same bureaucratic bottlenecks the LSPS aimed to eliminate. Even beyond the officially protected areas, much of Hong Kong’s land is constrained by its terrain; even the most attractive plots are sandwiched between conservation buffers and steep hillsides, leaving large-scale ambitions unviable.
Beyond its inherent geographical pitfalls, the LSPS collided with the deep socio-political sphere of small-scale farmers. As uncovered in a VICE report, farming and neoliberal capitalism have “become intertwined,” where many New Territories’ plots are held idle in anticipation of compensation windfalls and capital gains. Much of this ‘farmland’ is effectively ‘financially banked,’ functioning less as a site of production and more as a speculative pocket for investment. By ‘sharing’ these assets as public goods, the LSPS threatened the capital-market scarcity mechanism that has defined Hong Kong’s property economy. For developers and landholders, participation meant trading their appreciating assets for fixed, lower-yield projects, a scenario where even the largest firms would “only break even rather than make a profit.”
The wider macro environment acted in tandem with the scheme’s domestic flaws to hasten its collapse. Because the Hong Kong dollar is pegged to the U.S. dollar, the city is effectively forced to ‘import’ U.S. Monetary Policy. When in 2023 the Federal Reserve embarked on aggressive post-pandemic interest rate hikes, the Hong Kong Monetary Authority followed suit, intermittently selling USD and draining local liquidity. This resulting contraction sharply spiked the HIBOR (Hong Kong Inter-Bank Offered Rate), which reached its highest level in 15 years by Q4 2023 and created one of the least favourable conditions for the LSPS to thrive. Despite modest Southbound capital flows from the Mainland, including renminbi-denominated ‘dim sum bonds,’ these channels were insufficient in offsetting poor credit conditions, leaving developers with little incentive or ability to pursue long-term, low-yield projects.
In Hong Kong’s post-colonial era, residual British land ordinances sit uneasily alongside China’s tightening oversight over the city’s political and capital affairs. The LSPS, whilst conceived as the brainchild of pragmatic land reform, instead became symptomatic of the city’s oligopoly power and fiscal dependence on inaccessible land premiums. Brasilia’s withdrawal this month, spelling its demise, ultimately revealed that obstacles to Hong Kong’s housing are entrenched in policy inertia and vested interests. In such a financialised economy, where property valuations anchor banking liquidity and fiscal stability, it is little surprise that such a progressive concept fell on selectively deaf ears.